It is generally believed that economic downturns spur entrepreneurism,” say Tom Sawyer, a principal at RSW Partners in Grand Junction and ‘serial entrepreneur’, “Why? Because economic downturns do spur entrepreneurism.” Sawyer explains that the uptick in activity occurs when significant numbers of people find themselves out of work or under-employed and they respond; and that response often takes the form of entrepreneurism. The tough times act as a catalyst for many to take a step into new ventures that that might not risk under normal circumstances. “New ventures rise from ranks of the unemployed, under-employed and those that are fed up with uncertainty,” says Sawyer, “Existing businesses implement ‘internal entrepreneuring initiatives’ in response to pressures on their sales and margins. Economic downturns, as painful as they are, serve a purpose in eliminating low performing organizations while stimulating new ventures that might not normally have seen the light of day. Necessity is the mother of invention.”
“The basic fact is the people need income, and if they have trouble finding a job, they come up with their own solutions” says Chris Reddin, an entrepreneur who specializes in strategy, marketing and finance who recently moved on from being the executive director of the Western Colorado Small Business Development Center to pursue her own independent consulting career.
While economic downturns do correlate with entrepreneurial activity, they also offer added benefits to those seeking to “go it on their own” in terms of risk and opportunity. “A downturn can be a good time to start a business because some of the risk of economic fluctuations is minimized,” says Reddin, “Businesses are normally impacted by the broader economic conditions. If you start a business in a downturn, the thinking is that you are less likely to see further declines and can take advantage of the expected overall economic improvement. I think both of these factors are at play today in the Grand Valley.”
But not all of the activity is something that is readily apparent to consumers and customers. Much of what business are doing today is in helping themselves prepare for the future and in becoming more competitive and viable in this economy. The businesses are put into this position for a variety of factors. “The poor economy is definitely spurring entrepreneurial activity in the valley, but a lot of it is under the radar,” says Sawyer, “I would describe most of the activity that I see as ‘positioning’ rather than ‘launching’ activity. I am consulting with two high tech ventures that are on hold because their Angel financing channels are in ‘wait and see mode’.”
Both Reddin and Sawyer, while seeing a lot of energy waiting to be released in terms of economic activity, also see the same overriding concern with businesses and entrepreneurs in the Grand Valley that many across the country have: uncertainty. “The Valley has huge pent up energy, but the many of the key business players, as with the rest of the country, are holding back due to uncertainty related to the general political and economic conditions,” adds Sawyer.
Even though uncertainty is playing a role in businesses branching out into the marketplace, it is not preventing them from looking inside for solutions. “I am seeing substantial ‘internal entrepreneuring’ activity in my direct contacts with existing businesses and clients. These activities are truly entrepreneurial in that they represent new approaches to business as usual, but these businesses are positioning for the future, not moving out into the marketplace,” says Sawyer. This activity is not relegated to businesses only, as individuals are also looking for new ways to market themselves to companies. “One interesting trend right now is the increase in self-employed and freelance workers,” explains Reddin, “People who have a specific skill are finding that it is viable to offer their services to multiple clients on a contract basis rather than trying to find a full time position with one firm.”
Technology is also playing a role in how entrepreneurs are approaching opportunity in today’s economy. “I am a seeing technology based ‘niche’ entrepreneurism driven by the appearance of new marketing technologies,” says Sawyer, “And it’s hard to ignore the ‘extreme entrepreneuring’ that is occurring in products and services related to social media and mobile communications at a national level.”
The economy is playing an influential role in the entrepreneurial marketplace in terms of keeping the reality of entrepreneurs in check. “I think that the challenges in accessing bank debt and the slow or delayed recovery are making it challenging to actually get that new business off the ground,” says Reddin. And while lack of financing and slow economies are generally obstacles entrepreneurs seem to always have to overcome, it does help them focus as well. “Check your heart and make sure that you really, really love the idea of your business. You are going to be married to it for some time,” says Sawyer, “Check your head and make sure that you have enough expertise in your area of interest to hit the ground running. Check your wallet and make sure that you have the resources to carry your idea beyond cash flow. On the job training does not work in start-ups.”
Both Reddin and Sawyer believe that local entrepreneurs are indeed keeping their reality in check. They both point to the bevy of activity at the Business Incubator Center where individuals and businesses can find the resources and information they need to make level-headed decisions.
But optimism reigns supreme in the world of entrepreneurs, as it always has. “The outlook for entrepreneurs is the same in any time period. Their success or failure is largely of their own making,” explains Sawyer, “Having said that, the general business environment is important and the most important factor of the environment is the relative level of certainty. Entrepreneurs will adapt to almost any set of conditions, but they need to have some level of certainty as to what those conditions are to be.” And every economic period there is opportunity. “Find a problem and offer a solution people will pay for,” says Reddin, “Make sure you are providing value, and keep your products or services relevant to the customers current needs.”
The current economy across the country and in the Grand Valley is causing individuals and businesses alike to be more efficient, cost conscious and creative. The economic conditions are creating plenty of opportunity as there are new problems to solve and new ways to generate value for entrepreneurs at every level.